Forest, Trees and MIT

July 14, 2009

Over dinner last week my father-in-law reported that statisticians at MIT had discovered, through crunching thousands of lines of data, that consumers trust people they have relationship with more than corporate communication when it comes to purchasing decisions. MIT are now trying to define a formula and metrics which can be followed to ensure that this can be tracked.

As too their “discovery” my response was to cast dispersions on how often they got out. As to the formula and metrics, I hope they fail miserably.

Relationships, the anti-metric

What’s funny is they could have saved themselves hours of computing time by going to any car dealership. In every dealership there are a handful of sales guys who have been there the longest that do the bulk of the business. Why is this? Relationships. The guys who have been in a market and industry the longest are normally the most successful. It’s always struck me as odd that even knowing this, sales guys tend to move companies every couple of years.

Alright, I concede that although the MIT crunchers would have discovered that relationships drive sales they wouldn’t have been able to distill the evidence into a definable, trackable, enforceable metric. You can’t track the power or reach of relationships, there are too many variables. The more subjective variables you add the further the model drifts from reality. The only fact that is attributable to relationships in the sales cycle is the fundamental one that those with lots of them tend to sell more.

I’m really not against metrics.

Don’t get me wrong, metrics are very useful. They help you define what type of forest you are in, what season it is and the position of the sun. My concern is when companies and managers focus solely on the metric at the expense of the forest.

I have worked for many companies who focus solely on one tree and didn’t understand how that tree related to the forest. The presumption is that if a defined metric has distilled the forest to a tree then the reverse must be true. It isn’t. I can cite multiple examples where 15 phone calls in a day sold as much as the required 20, where 1 visit to an account a quarter was appropriate even though their quarterly revenues, according to the metric, called for 3 visits.

One company I know was astonished when a particular campaign failed to achieve it’s goal. They were astonished because all the preeminent business school theories on the subject they subscribed to implied that if (a) was executed then (b) would happen. What the theory had not communicated, or possibly left out, was the impact of the relationship the company had with the consumer.

Relationships and metrics, together in perfect harmony.

There are tools and techniques that can be used to build relationships and then leverage them to generate revenue. However they can only be used if the relationship is built first. It’s like learning how to swim by watching Michael Phelps. You can learn all the advanced techniques you like but until you get in the water they’re useless.

I was talking to a friend who is a retail store manager. This particular chain sells extended warranties with their product and they require a minimum closing ratio from the sales associates. They have training workshops, role playing guides and bullet points all designed to have a their associates at an equal level of competence. Their pitch to the associates is that if you follow the plan outlined you will sell extended warranties. If this is true then why is there variance in the closing ratios of different associates in the same store. Simple, relationships.

Here’s the line used by the sales associate with the highest closing ratio for extended warranties in the region.

“Do you want an extended warranty?”

Why does that work for him? Relationship.

Relationships first, cleverness second

Without a basic relationship all the metric improving, funnel filling, sales tracking procedures will not drive more sales or users. Once you have that relationsip, once the consumer is engaged with you in some way beyond stumbling into the store or site, then the metric driven side of sales growth becomes applicable. Not before, after.

Infocomm 09 follow up

June 23, 2009

Following on from my last post (Infocomm 09, A Social Media Perspective) and with many thanks to Benjamin Slayter (SGASI), Dawn Meade (AVDawn.com) and George Tucker (Crestron) It appears I missed more than I found. I was actively looking for SN penetration and I missed 3 companies efforts and 2 Tweet ups. They just didn’t come across my radar.

Why did I miss it?

Social networking is all about people groups and interactions within and between those groups. I missed them because I was too separated from their target people group and the tools I used to gain an overview (#IC09, perspctv and Technorati) didn’t pop them onto my radar. This could have been for many reasons, wrong keywords, wrong time of day, lost in the clutter, all of which meant that I missed them.

Networks and relationships.

My failure to find this outreach raises a point regarding networks. George Tucker from Crestron commented on my original post and summarized their SN results at Infocomm.

“During the seven days CEN-BLG(beta) was active at Infocomm, we gained 200 followers and had over 4000 hits. Twitter followers commented on the products and generated conversation beyond the original post. My metrics showed a potential reach of over 10,000 for each post.”

Fabulous, a veritable tsunami of interaction and I still missed it. I was not in George’s network during Infocomm. Maybe I would have been, somehow, in one of his colleagues networks. Maybe I know someone somewhere else at Crestron but as I didn’t know George I had no idea of the outreach he was implementing even though I was interested and actively seeking it.

Thought for the day.

This leaves me with  a thought. Or, in fact, a confirmation. No matter how hard you try or how successful you are at getting customers into your SN boat, you will always miss some of them. That is why SN isn’t a silver bullet, it’s a vehicle for deepening the relationships you already have and multiplying the entry points for relationships you don’t.

Make SN wide.

SN needs to be wide, the more people in an organization disseminating information the better. SN should not be the domain of the marketing department. In fact, the more I learn about SN the more I’m convinced that marketing should be the lowest generators of outbound SN in an organization.

Marketing should absolutely lead and construct the framework but the content should come from engineering, development, shipping and customer service. The conversations that users are having are not about marketing, they are about engineering decisions, development possibilities, logistics and support. These are the people customers want to have a relationship with. Customers normally only want a relationship with sales and marketing if there are bagels involved.

Next year?

I’m glad that Crestron are looking to expand their SN efforts at Cedia and Infocomm (#IC10). I’m sure that the SN presence by all manufacturers at IC10 will be greater than at IC09. Hopefully they will all be discovering that it’s not difficult, it just takes organization and hard work.

Thanks again to Ben, Dawn and George. Their conversation is what makes it interesting.

Tradeshows are a gift to social marketers. Thousands of people, interacting with you, your company and your product. Think of the photo opportunities for your Facebook page. The opportunities to get customers to follow your Twitter accounts (product, company news, tech support etc etc). The opportunities to create buzz, interest and traffic.

Infocomm

So, with great interest, I ventured onto the floor of Infocomm ’09 to see how many companies would use these tools to elongate and enhance the penetration of the show into their customer base.

Simply put, it was a desert. Not one company I saw was driving or enhancing the show through social marketing. There were individuals tweeting from and about Infocomm (#IC09) but hardly any companies were tweeting corporately. Audix, Draper and NEC tweeted about product launches and Crestron tweeted from their party but, as far as I could tell, no one exploiting social marketing tools to gain extra penetration.

Relationships Rule

I used to service the AV industry and checking back in with some of my old dealers revealed an interesting pattern. Those dealers that focused on building relationships, communities and engaging users have weathered the economic storm better than those that focused on closing the sale.

I maintain that social marketing is not difficult it’s just time consuming and requires planning. The extra effort required to provide a social marketing perspective to a tradeshow is minimal. All that is needed is a plan and briefing of the guys working the booth. If those manufacturers and dealers who focused on the relationship have succeeded to keep their revenues ticking along I’m wondering why there was so little attempt to build the relationship through the show.

What I would have done.

  • Start a specific tradeshow/new product LinkedIn group.
  • Start a twitter feed for new products.
  • Get photo’s of booth visitors, get their names and permission to post to Facebook.
  • Tweet about product demo times/launches.
  • Follow up tweets on products launches.
  • Ask the customers if Twitter would be useful to disseminate information (shipping info, order status, support ticket status etc etc).

Next year I hope to find companies building relationship using social marketing tools. It’s not difficult, it won’t hurt and the worse thing that could happen is that you and your customers may get to know each other better.

What was your experience at Infocomm? Was there more social networking going on than I was aware of? Let me know, I’d love to know.

Are market structures reverting to a niche, fractal, existence?

Are market hierarchies about to crumble?

One of the great side effects of long bike rides is that it allows plenty of time to ponder. To take a step back and look at the totality of a subject or issue instead of the constant focus on the immediate. For some reason as I was wending my way through the back roads of Chattanooga, dodging dogs and rednecks, this thought stuck with me.

(Fair warning, this post contains sweeping generalizations and reduction of complex socio-economic principles to their simplest form.)

Back before economies of scale

Back in the land that time forgot everything was local, mostly because you really couldn’t get there from here. This bred a local need for almost every service. Economies of scale were difficult to leverage because it was difficult to expand beyond a locality. In many ways each locality and it’s associated services was duplicated almost exactly every few miles at the center of another concentration of population.

I see these as being the main patterns of a fractal market structure, (fractal is probably not the correct mathematical term for this pattern but my use of it is to describe the repeating nature of a pattern at varying resolutions of population). A specific industry at the regional level would be a copy of the industry at the state level which would be a copy of the industry at the county level which is a copy of the industry at a city level.

The market was essentially flat with no national brands or presence. As the geographic area of study expands and contracts the same pattern emerges.

After economies of scale

Improvements of communication, road, rail etc etc broke that pattern. It allowed strong companies to take over weak companies and exploit underserved markets. It allowed a brand and presence to be built which allowed certain brands to stand above the others in its industry and exploit a national presence. Thus the hierarchy.

Few giants, multiple regional players and hundreds of local wannabe’s.

After hierarchies were established there was always some competitor to measure yourself against, take over, outsell or sell out to. So,  for a few hundred years, that’s what we did. We planned and measured our businesses against the hierarchy of our industry.

Then the internet arrived, bringing with it a whole new set of economies of scale which are now beginning to cause market structures to revert back to a fractal existence.

Web 2.0 – The consumer takes over

For me, one of the main differences between web 1.0 and web 2.0 is that the protagonists have shifted from organizations wanting to sell to consumers wanting to consume. Instead of the organization forcing consumers into a behavior to serve the needs of the company, the company now has to serve the consumer in order to maintain its success.

Consumer driven markets tend towards multiple niches as each consumer exercises choice in order to satisfy needs, wants and interests.

Replace geography with demographic.

I think that as markets were niche due to geography before road and rail, they are now returning to niche due to demographic. I believe that companies will discover that mountain bikers in Oregon are separate and respond to different messages and value propositions to bikers in Washington or Montana.

“All politics are local” is one of the great rules of politics. I think we’re moving towards “All industries are local.” I see this as a marketing and customer service transition rather than a manufacturing and distribution one. In fact globalization of the manufacturing and distribution chains may well have hastened this reversion to niche demographics. When all products in an industry come from several large suppliers who supply all to everyone the only thing to differentiate between competitors is how they relate to their customers.

Those who relate best to the most number of market niches will succeed. However I do not see one company being the best at relating to all niches. There will be variation in how each company succeeds in this relationship. It is a model built on accepting variances of penetration in specific niches and looking at the totality of success across the market as a whole, the macro of all the markets niches.

It’s all breaking up!

I just discovered from a great Wired article that Tom Malone at MIT pondered this same thought in the late 80′s. His paper dealt more with the effect of more traditional economies of scale forcing the breakup of industries into smaller more agile business units acting as an affiliation in a market, but his conclusion was still the same. Markets and the industries that serve them are breaking up into niches. As I’ve said before, you’d better know who your customer is.

What do you think?

Have I found the wrong tree to bark up? Did I miss something in econ 101? Are you seeing it in your own market? Let me know.

Chris Brogan, yet again, beat me to it. I’ve been trying to get this post finished for a couple of days now and in my procrastination Chris comes up with a better worded, more provoking post than my draft.

BOOOO HISSS

After all Chris has been at this longer than me so it’s probably to be expected. His post this morning “How Many Chores Does It All Add?” put into perspective the sheer amount of work swimming in the SM world takes.

“In the morning, I open up Google Reader and start by checking out who’s talking about me, my company, PodCamp, and a few other choice terms. I read a few blogs (around 700). I check on some other searches for clients that I’ve loaded into my reader.”

Warning, hard work ahead

The one part of SM that has become blatantly obvious to me in the past year is the constant nature of keeping up with it all. Unfortunately the internet does not sleep and so the posts and their creators do not sleep either. It is the Matrix, a constant stream of stuff that may or not be relevant but needs to be weighed and judged.

This is why it’s best to spend time working out who you listen to, who you read and why. Your time is precious, especially if SM tasks are directly related to engaging the customer base of a company. Without a defined focus it’s easy to loose track and definition of the very thing you’re looking for.

Warning, tools ahead.

To help, I use certain tools to help me stay focused.

Tweetdeck – Organizes various Twitter groups into separate streams

Perpsctv – Gives a great overview of a search term’s penetration in blogs, Twitter and Google search.

Technorati – Blog search engine.

Google Trends – Tracks how search terms are trending.

Delicious – the great book-marker in the sky.

There are plenty more but I use these to keep ahead of what I’m looking for.

How I do it

First thing in the morning I check the Twitter feeds to see if anything interesting has popped up. I don’t read everything immediately, I open the link and move on to the next item. This will normally lead to having 10-15 links open which I will digest through the day.

I make sure that I subscribe to relevant blogs so that I am prompted when new posts appear. This saves me from making sure I check them. If anything interesting surfaces I then move on to a more in-depth search using Google, Techorati and Perspctv.

Delicious is my archive. I tag anything interesting I find in Delicious. The key is to have a predefined set of tag words so that a coherent pattern appears without similar links being marked with multiple tags. Basically the free wheeling dissemination of opinion and expertise that is SM actually requires organization and discipline to track it.

Think of it like the stock market

The closest analogy I have found between tracking using SM and anything else is following stocks. There are thousands of stocks to invest in. It takes time to find the ones you like and understand so you have some chance of knowing the underlying business model. It then takes time and discipline to research those stocks, their movements and how they react to other economic stimulus. The weight of data and opinion out there is staggering and it’s up to the investor to weigh and judge in order to formulate his premise for investment.

Any thoughts?

I’m, by nature, an organizer. I’m never happier than when I’ve constructed a workable, scalable, implementable procedure. Maybe my reaction to tracking SM is purely to do with me. How do you do it?

I’ve taken the past few weeks to digest all the Social Marketing information that I normally follow. There’s a lot. There’s a lot of opinions, there’s a lot of following an idea because (please insert SM guru of the day) said it. However there’s also a lot of really well thought out, well stated and written theses on how to corral this exploding market and harness it.

Is the SM world flat or round?

A lot of who I read to gain insight on how this market is evolving, stems from my own feelings towards it. I gravitate towards a particular viewpoint that supports how I feel and how I have seen SM work the best. I tend to steer clear of, apart from the occasional glimpse, any conflicting opinions. I’m always open to giving a well rationalized argument it’s due but I tend to avoid the overt sales pitch.

I don’t see this as a problem. The SM world has yet to be defined as flat or round. For all I know it may be both, depending on your community and message. It may be that all viewpoints are valid in the context of their creators, communities and messages.

It may be many things, but it’s not a strategy.

Although I don’t see a polylogue on SM as a bad thing I know it annoys those who wish to include an SM strategy in their business. So, here’s my big idea for the day.

Don’t.

Don’t include it as a strategy, it’s not. SM is far too young to have defined paths of implementation beyond the fundamentals. It has not had time to evolve and coalesce into a 4 hour seminar. This is both fantastic and annoying. It’s fantastic because now is the time to experiment to explore and determine, to quote Mr Rumsfeld, what you know, what you don’t know and what you don’t know you don’t know. It’s annoying because, especially in this climate, getting the leeway for this experimentation is tricky.

It’s fundamental

I read an article last week  quoting the CMO of  Unilever on their decision not to implement an SM strategy. Good for him. A lot of comments were berating this statement as yet another big business not moving with the times. I don’t believe Unilever should implement SM as a strategy I think they should implement it as a new, fundamental avenue to interact with their customers.

Just as you learn any hobby you realize that there are fundamentals to success that if not adhered to will cause failure far before you actually step up to take the shot, climb the hill, swim the lake. SM, at this stage is the same.

The one current theme that flows through all the conversations on this topic is that of building and engaging community. Without community with whom are you going to socially network? Without a social network who are you going to socially market too?

Fundamental step one.

Know your community. Know your customers. Read what they write. Understand how and where they communicate. Without this any attempt at SM  is doomed before it begins. Thankfully knowing your customers better is an easier sell to those who pay the bills. Who wouldn’t want to know their customers better?

What do you think? Is it a strategy or is concentraing on the fundamentals a good first step to implement?

Twitter’s future.

April 9, 2009

One of the guys I follow on Twitter (sorry forget who) tweeted this article on The Washington Post‘s site re the launch of Twitterpartners.

The service, which launched this week, has 12 ad agency partners already including Unamis and Salesforce and says it is “building a suite of apps, tools and services to help brands, media companies, and celebrities harness the power of the Twitter ecosystem.”

I believe that this is the first, serious, coordinated attempt by existing advertising and media companies to define a structure which uses Twitter as a marketing message delivery vehicle.

The end of the beginning?

I believe that Twitter, and most of the social networking sites haven’t found their stride yet. It’s all well and good having gabillions of users but to generate revenue you have to be able to do something with them. For me that’s always been the fuzzy part of the social networking business model. If you build it, they will come but how do you make money when they do?

So, does the advent of this company mark the end of the beginning of Twitter. Will Twitterpartners model to use Twitter be the step that takes it from noise and chaos and introduces structure which allows it to blossom as a one to may broadcaster?

The beginning of the end?

Or is this the end of Twitter as we know it? Will the imposition of a structred, reproducable response to using Twitter as a marketing channel cause it’s demise?

A double edged sword

People want to communicate, they want to discover and learn. Social networking is a fantastic vehicle for collaboration, learning and making relationships. I don’t think that commercialiasation of the space is a bad thing, in fact I think it should be welcomed and encouraged. I think Twitter needs some more coherency and large organizations using it will help define and foster that coherency.

We don’t need another billboard

Having said that we don’t need another billboard. There are plenty and the the drop in ad placemenets and rates may be indication a saturation point in that particular vehicle.

The penetration of larger organizations, purposefully using Twitter for engaging and building relationships with customers, will only make a great form of communication more useful. However if those larger organizations treat Twitter like another billboard we’ll have to start another one, and keep starting them until the message gets through. We don’t like being talked at, we like talking with you.

The end of the beginning or the beginning of the end? I don’t know yet but I’m interested to see how it turns out. How about you?

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